Last month, a Texas man was indicted following criminal charges for his alleged role in a $60 million healthcare fraud scheme involving (1) one count of conspiracy to commit healthcare fraud and wire fraud; (2) four counts of healthcare fraud; (3) one count of conspiracy to defraud the United States and to pay and receive healthcare kickbacks; and (4) two counts of solicitation and receipt of healthcare kickbacks. If convicted, he faces up to 20 years in prison for each conspiracy to commit healthcare fraud and wire fraud count, a maximum penalty of 10 years in prison for each healthcare fraud and anti-kickback violation count, and a maximum penalty of 5 years for each conspiracy to defraud the United States and to pay and receive kickback count.
As part of the scheme, Robert Leon Smith III allegedly submitted false and fraudulent Medicare claims for medically unnecessary durable medical equipment (“DME”), genetic tests, and foot bath medications through various DME companies he owned or operated in Florida, Texas, and Maryland. The indictment alleges that Smith paid offshore call centers in exchange for Medicare beneficiary information, sometimes in conjunction with forged physician orders, typically obtained using deceptive telemarketing practices. Where the call center did not include a physician order, Smith is alleged to have submitted the beneficiary information to purported telemedicine networks, along with kickback payments, to generate a physician order. These orders were alleged to be obtained without physician interaction with the patient and in an absence of medical necessity. Where Smith did not submit claims for payment related to the falsified orders, he is alleged to have referred these orders to other DME suppliers, pharmacies and labs in exchange for kickbacks.
While marketing methods may be used to generate business for healthcare ancillary providers, it is imperative that these arrangements be structured to comport with applicable law. The use of offshore call centers and deceptive telemarketing strategies is a common thread in many enforcement actions, particularly those involving telehealth. This indictment reinforces the importance of obtaining competent counsel in the development and implementation of similar business arrangements, including those that involve marketing efforts to generate and sell beneficiary information. Moreover, stakeholders should remain wary of arrangements involving beneficiaries with whom the providers have limited or no contact.
Frier Levitt attorneys have advised marketing companies, management organizations, practitioners, other ancillary providers, and technology companies on developing and restructuring marketing and telehealth business models to comply with applicable federal and state law while considering concerns unique to each arrangement. Contact Frier Levitt to consult with an experienced regulatory attorney to review your existing or proposed marketing or telehealth model.
